Americans willing to pay (a little) more for privacy

Research from Carnegie Mellon shows that many Americans will pay more for a …

Are American consumers willing to pay more in order to protect their privacy, or is online commerce all about the lowest possible price? That's what researchers from Carnegie Mellon University set out to learn in a new study on privacy and commerce (PDF) that will be presented at a conference tomorrow. They found that people will, in fact, pay more to purchase from sites with a solid privacy policy, but only if that policy is easy to see and understand.

To start the survey, researchers asked the participants if they would be comfortable buying certain items online with a personal credit card. As you can see from the image below, people were less willing to purchase material that could be used for violence, while sexual objects were a bit less worrisome. And some people in the study appeared to have had issues with buying even office supplies online.

Image courtesy Carnegie Mellon University

Survey participants were then asked to make a serious of online purchases using personal credit cards for which they were reimbursed, and participants could keep any extra money that was saved by using the cheapest retailer. The participants were divided into three groups. One group was given no extra information about the shopping sites (real sites like Amazon.com were used in the test). The second group received information about the sites, but it was irrelevant and should have had no impact on purchasing decisions. The third group was presented with privacy information using Privacy Finder, a search engine developed by Carnegie Mellon that looks at a site's Platform for Privacy Preferences information to rank privacy policies.

When participants were asked to purchase both batteries and a vibrator, there was almost no difference in the price paid between the group that received no information and the group that received irrelevant information. The group that received the privacy information did show quite a difference from the group with no information, however—participants in group 3 paid $0.59 more for the batteries and $0.62 more for the vibrator.

The researchers say that their experiment "shows that once privacy information is made more visible, people will tend to purchase from merchants that offer more privacy protection and even pay a premium to purchase from such merchants." They know that this result held true even when the item in question was not a "sensitive" item.

The news may be reassuring to privacy advocates, since it indicates that Americans do actually care about online privacy. But the study also shows that they only care when privacy information is presented to them in an obvious and simple format (in this case five colored rectangles showed each site's level of privacy). It could also be good news for retailers, who can use robust privacy policies as a selling point, though that also means giving up the revenue associated with selling mailing lists and other, less private uses of customer data.